Collective2 auto-trading

Signals from Collective2‘s strategies may be traded either manually or automatically.

You can choose to receive the signals from Collective2 by e-mail, thus entering the trades yourself; or, for a monthly fee depending on the number of strategies, you can setup auto-trading on a compatible broker. The current fees are displayed in this screenshot :

Collective2 auto-trading fees

Note that you can get a discount (33%) if you sign up for a whole year.

If you subscribe to many different strategies, or trade very volatile instruments I would strongly advise you to go the auto-trading route. Signals e-mailed to me by Collective2 sometimes take 15 minutes to reach me, potentially voiding it as the instrument’s price has moved a lot ! However, if you only follow slower strategies, you can manage orders manually, saving you this fee. Here’s what you should know about Collective2 auto-trading

Connecting Collective2 auto-trading to your broker

My broker is Interactive Brokers; it offers low commissions and great executions. Setting up auto-trading was surprisingly easy : I had to print/sign 4 forms provided by Collective2, and send the scans to Interactive Brokers. It only took 2 days for auto-trading to be approved !

Many brokers are available, so it’s likely you’ll find yours in the following list of supported brokers :

You can also choose a “simulated” broker, meaning Collective2 will keep track of how your portfolio would have performed. I don’t find it too useful, as the progress of each strategy is tracked rather precisely.

Auto-trading control

If you choose to auto-trade, you have some control on the strategy scaling and risk level :

  • you can set a scaling level, expressed as a percentage of the current model’s portfolio size. This works well for stocks, but for futures I usually set this one to 100 and scale down by specifying a max number of contracts instead
  • you can also specify a custom stop loss. I really advise you to do so, especially for strategies trading only one instrument at a time.

Here’s what Collective2 auto-trading setup looks like for the strategy called Simplicity Trading :

Collective2 auto-trading setup

When you modify these parameters, you’ll see what the PNL would have looked like for the recent trades

Collective2 auto-trading estimated PNL

This is extremely useful, as you’ll see the traded quantities and the effect of stop losses. You’ll have to setup these parameters for each strategy individually.

When you start Collective2 auto-trading, you have the option to join existing positions. I strongly advise you to ask the trade leader about this; in most cases I refuse to join them and wait for the next signal, as I missed the original entry and don’t want to chase.

Similarly, if you ever stop auto-trading, Collective2 will let you choose between closing your positions automatically for the strategy, or let you handle it. I never had any troubles with positions auto-closing, but I always check the positions on my broker’s screen just to be sure !

Collective2 Auto-trading restrictions

One important restriction to be aware of is that it’s not possible to auto-trade and trade manually in the same account. Sending a manual order will deactivate Collective2 auto-trading (whose effect is a bit unclear : it apparently enters new positions, but I think it doesn’t update existing ones).

Note that if your broker liquidates one of your positions because of margin constraints, this will also stop auto-trading. Collective2 will send you an e-mail in this case; I strongly advise you to check for such notification regularly !

Also, if you trade forex, you’ll probably regularly close all non-base currency balances resulting from your trades. These trades will also disable auto-trading.

Managing open positions

Although you can’t manually trade, you still have some control on the positions opened by the strategies you follow.

For each strategy, you’ll see the open positions, unrealized PNL, and current stop / profit taking levels.

These can be modified manually; you may also reduce the current position (in which case Collective2 will trigger a market order).

Collective2 auto-trading open positions

Leave a Comment

Your email address will not be published. Required fields are marked *